New bill pushing for $10 minimum wage; how will this affect economy?

The prices of goods will go up no matter what, due to inflation. When the value of the dollar goes down, prices rise to compensate.

This all happens while wages stay the same, so every cent the dollar loses in value is a cent less you are making in wages. Because of this minimum wage workers are earning less and less every day.

Raising minimum wage to compensate for inflation may be shocking, but it is not the raise in minimum wage that causes the increase in the price of goods. Its the raise in the price of goods that causes the need to increase the minimum wage.

Inflation is the disease, that is what should be focused on.

Minimum wage, and the price of goods are just symptoms. Treating the symptoms will do nothing to stop the disease.

DC

reply to post by oneness86


In this economy do you know what the difference is between $7.25 to $10.00/ hr? Nothing. Neither can support a family. Well, not in Massachusetts anyway. Nearly half of my pay goes to health insurance. So, I make the equivalent of $14.00/hr, and take home $1,600 per month. A one bedroom around here goes for $1,000. Add a loan payment, cable, internet, phone, days out from a flu... I can't afford that one bedroom. Ten bucks an hour is for teens in school and living with parents.

reply to post by oneness86


It won't kill off small business..

It will keep small business smaller for a longer period of time though and most smaller businesses will have to have less employees, but those employees making $10 and hour will be better employees and work harder making $10, then, they will making $7-8.


Positive = More smaller businesses that focus on quality over quantity.

Negative = Harder to expand for smaller businesses. Well , harder to expand into the big business realm. They can still expand, but at a much smaller and slower rate I would think.


It's hard to judge a change like that, because it's assuming it's a change implemented into our current structure as is, and with no other changes to be made or included with or afterwords, which could also effect the outcome.

IMO people will find a way to innovate and make that business model work for them. Could mean more customized smaller businesses where they keep their workers for longer periods of time because the workers work harder and can maintain a better lifestyle so they enjoy work more and appreciate the money they make.


Trust me when I say even $10 compared to 8-9$ and hour makes a huge difference.

well one thing I know. McDonalds with their record breaking profits over the last few years could afford to easily pay their employees more than 7.25 an hour. Start with companies like MD who are making money hand over fist and raise the minimum wage on them at least. and make it so that they can't change the prices or they will triple the wage they have to pay to their employees.

reply to post by dreamreader

Besides, I have had the opportunity to work with some folks that only make $7.25 per hour and I wouldn't want to pay them any more than that. Quite useless to be honest.

Hey now - I've been in that pay scale before, and I've always been highly competent and trustworthy. I'll agree that a good many people who fall into that category definitely pan out as you say, but one also does well to consider various mitigating and contributing factors, other limitations, and outlooks.

Conversely, I'm well aware of many people on the top end of various pay scales and educational certifications who aren't worth a lick. This was one of the many deciding factors that hasn't yet let me motivation myself to work towards a degree - they apparently mean nothing and are just feel-good button pushers for some people in certain decision-making capacities.

And honestly, with the worthlessness I've seen from some people with degrees - I don't trust the judgement of these decision makers. I'll find my own way instead of jumping through worthless hoops to impress someone who will hire an utterly clueless idiot just because of a piece of paper, regardless of what they think that paper SHOULD mean.

Take care.

reply to post by LucidDreamer85

It will keep small business smaller for a longer period of time though and most smaller businesses will have to have less employees, but those employees making $10 and hour will be better employees and work harder making $10, then, they will making $7-8.

Disagreed. I have never half-assed because I was being paid less (now, if my pay DECREASED, I might think about it) - I busted ass to prove my worth and earn more trust and pay.

And employee who doesn't always give what they can to the full probably needs to be shown the door, because then it's just going to be "Why am I only making $10 an hour? There are people making a lot more than that, this job sucks! Bitchbitchbitchbitchbitch....".

Just my thoughts on the matter, as I've never seen your claim pan out in my personal experience. Now, you give me a carrot to chase and promise to pay me even more, and you're damned sure I'll push even harder as long as it's a fair exchange. But if you're only paying me the federally-mandated minimum wage...that's not motivation, that's the law. "Eat is, suckers! You gotta give me more money for nothing!"

The best alternative is to fix our minimum wage to rise with inflation, an idea that even Presidential candidate Mitt Romney has openly endorsed. This would generally maintain the standard of living for most citizens at a level which cannot be damaged by the regular increases in inflation rates. If inflation should go up by 10% in a year, so should the minimum wage.

reply to post by Praetorius

Sorry, didn't mean to get your dander up, that's why I said "some" people. I too have worked the bottom of the bucket wages and it was an incentive to better myself. I'm mostly referring to those that have gone through the school system and blatantly refuse to better themselves. There is a huge difference between can't and won't.

reply to post by Misoir
I definitely like the thought, Misoir (and was amazed some years back when I saw Playboy report that had this been done...back in the 70s?...minimum wage then would have been between $12-$20/hour, IIRC).

But do we not still run into the same issues, in that case? I mean, is there any way to mandate that business owners/employers also receive a comparable increase in business income to offset their negative effects from such a thing?

I'll admit, I've never delved too deeply into this, but I tend to respect you, so let me know what I'm not catching here.

Thanks in advance.

reply to post by dreamreader
No worries mate, you didn't upset me, but I definitely wanted to clarify that. You're doing just fine.

The problem is the GREEDY execs not the minimum wage.

1 Minimum wage increases
2 Exec raises prices to cover minimum wage increase.
3 People are still poor

What total nonsense!

Ok let' forget the employer is already paying:

The employees unemployment "insurance"
The employees Social security


Now hit up agian to give someone 10 bucks and hour to flip burgers!!

How will that effect the economy business will close it's doors after all when it is cost more to keep the doors open than they are taking in minus their operating costs.

That is all she wrote.

reply to post by Praetorius


The return investment would tend to compensate for the loss in profit each year given to the rising minimum wage rates. If one applies the fundamentals of free market theory of supply-demand, if people are given a higher wage more will be spent, with more spent then comes in more profits which in turn should, in many but not all instances, result in an equalization of output for rising wages and input from rising consumption. Once again the less profitable businesses will struggle to balance these changes and thus will lay off workers, innovate, or go bankrupt.

This would simultaneously discourage the Federal Reserve from excess printing because as more loose money enters the economy the higher our inflation rate goes. If inflation is too high it would discourage consumers from purchasing more products mainly due to psychological impacts rather than actual net loss/gain through said investments. But with this negative impact businesses will feel the pinch before the employees which would result in an alleviation of this pressure by increasing the cost of products which in turn keeps the cycle going. Inflation at this point would have to be tamed, unlike today, because the first to feel the negative impact would be the business owners.

I am far from an expert in economics and there are presumably some flaws in my logic. Overall though I do not see this as a loss for businesses but rather a slight gain for workers.

Originally posted by LucidDreamer85
reply to post by oneness86

 

It won't kill off small business..

It will keep small business smaller for a longer period of time though and most smaller businesses will have to have less employees.

It won't even be that bad. Raising the wage is not what's costing those jobs. Those jobs are going to be loss anyway due to the inflation tax.

Think about it, if they raise the wage the business owner could say, well I can't afford to pay them that much, I'm gonna let them go. But imagine if they don't raise the wage? The prices are going to go up anyway due to inflation and eventually the employee won't be able to afford to keep working there anyway. They'll be working all week just to be homeless. They'll have to find another job anyway as prices go up.

Just like the bread company can't keep giving bread away or they go broke and starve to death, labor is no different. If the boss can't pay the increased price of labor then the employee can't keep giving away labor for free. They'll go broke and starve to death also just like the bread company.

Also, what business has more employees than they need anyway? Some, but for the most part, most businesses already have the minimum amount of employees. If they could do it with less workers most already would be. Nobody wants to have extra employees hanging around on the payroll just for their health.

I have a small workforce with my business. And I start my employees at $10.00 an hr. They more than make up for the above min. wage in loyalty, hardwork and not stealing raw materials.

You may not believe it but the old adage is true...

"Pretend to pay me and I'll pretend to work" "You get what You pay for"

And to those small businessmen claiming that paying a $10 min wage would hurt them....perhaps you shouldn't be in business in the first place.

It might push some workers over the food stamp limit and DECREASE govt payout.

My family votes and it would help us.

It's hard to train someone without experience if you have to start out at ten bucks an hour. Starting at eight bucks an hour on a construction site is all right. After a month or so the person will know what is expected of him and if he is working out all right he deserves a raise. After the person picks up things and can work unsupoervised he deserves another raise and with a year of service than another raise and maybe some paid holidays during the construction season. Then each year or two another small wage increase. I wouldn't hire someone who didn't have job experience if I had to pay ten bucks an hour right off the bat. What incentive is there to work hard and efficiently if there's no room for raises and bonuses. I'm sure I'm not the only business man who feels that way.

In the construction trades you need young strong youth to train so you feel you are passing along knowledge to someone. It gives a person a sense of worth and a person to chuckle about or discuss with the other seasoned crew workers. That's the way it's always been. I would never hire a college graduate to build houses or remodel. I tried it and it didn't work well. They usually feel that they are worth more than the job. Probably because they are in the hole from college.

reply to post by rickymouse


You're just skirting your own inflation tax. Everyone is supposed to pay the inflation tax to make borrowing cheaper in this country. That's how the system is designed.

Cheap loans is what allowed the housing bubble which lead to a lot of work for construction workers that they wouldn't have normally gotten. And after the housing bubble the cheap borrowing is the only thing keeping construction workers afloat right now.

$10 ain't what it used to be. It's worth less. Should a new worker get paid less in real value today than a new worker did 30 years ago? Sorry, but prices go up, and labor is no different. However, in terms of real value you're just paying them the same as they got 30 years ago. You're not actually paying them more. You charge more, you pay them more, but the real value is the same.

Without the wage inflation you wouldn't be in business at all because nobody would ever be able to borrow enough money to have anything built. Our entire financial system is based around those cheap loans. You don't skirt your inflation tax.

That raise in prices is called the inflation tax and it's YOUR tax that you SHOULD be paying to enable cheaper loans that make the construction business go round. Of course, if you thought you could get away with it by screwing your employees you would. Make them pay your tax. That'd be like making the bread company pay its own increases in prices. It just doesn't work. The price of bread goes up you have to pay more for bread. The price of labor goes up you have to pay more for labor.

And yeah sure, I know you'd like to screw your employees out of their money to pay your inflation tax, but the purpose of minimum wage is to make sure that doesn't happen. Its whole purpose is to make sure YOU pay YOUR inflation tax to keep borrowing cheap.

Don't like it? Then we need to think of a different system and get rid of the Federal Reserve and our fiat money system that does not work without an inflation tax. It literally cannot work without inflation. It would all fall apart.

Increasing wages are no different than any other cost component of a final product. It will put inflationary pressure on the end price of the good or service being offered, which in most cases is going to result in weaker demand and slower economic growth. Its not so much a question of whether it will have a negative impact or not, but rather how much of a negative impact it will have. That's a question that's difficult to answer.

That said, it would benefit me, and I have job security. If Obama can get it passed, I'll gladly say thank you...but there's no way in hell I'm going to vote for him.

reply to post by Praetorius


If you'll take off your rose-colored glasses for a minute, you'll see that there's absolutely no logic in going back to the bad 'ol days before the minimum wage.

You see, the typical responses in a thread like this are always pro-business. I suspect that they're more sycophantic in nature than meets the naked eye.

You need cattle to keep the other cattle in line with the rancher.